After attending the EuroFinance International Treasury Management Conference in Geneva, one thing is abundantly clear: change is the only constant in corporate treasury right now.
Conversations centered on how treasurers can best prepare for the future. Emerging technologies, evolving business models and the impact of geopolitical forces were of particular focus.
With that in mind, here are some thoughts around what treasurers preparing for the future need to be thinking about.
1. The art of discovery
When working in corporate treasury, it’s easy to only focus on what’s right in front of you. If there are urgent issues that need solving today, which there often are, tomorrow’s plans can wait.
But corporate treasury is a profession in transition. So yes, treasurers need to be in the present and managing the issues that arise today. But treasurers also need to be curious about the future. Just because things happen a certain way now, it doesn’t mean they will happen that way in the future. Treasury must prepare for this or risk falling behind their peers.
The overall message: go out there and discover. Treasurers should carve out time to talk to banks, technology vendors, peers and those outside the industry to hear about the latest ideas and thinking. This is a crucial first step when looking to prepare for the future and propel the treasury department to the next level.
2. Collaboration in action
Treasurers have never had more choice. In the past, they obtained products and services from a select group of banks and a handful of technology companies. Today, these options still exist, but there are also thousands of fintechs out there innovating around niche product offerings.
While choice is never a bad thing, it complicates matters for treasurers somewhat. It’s not always clear which fintechs are here for the long-haul and whose product really suits the needs of the organization. As a result, treasurers quite naturally continue to use what is familiar and miss out on game-changing innovation.
This dynamic is changing, however, and collaboration and co-creation is en vogue. Banks are cherry-picking the most impressive fintechs to work with them to deliver solutions to customers. In this scenario, vendor selection becomes a more straightforward process for treasurers, who can benefit from an innovative fintech solution that carries the stamp of authority of a bank.
3. Reconfiguration of supply chains
Geopolitical tension between major economic powers is creating increased risks for companies operating across borders, impacting the way businesses are functioning.
Most notably, businesses are exploring the potential of sourcing, producing and selling in new markets. This is as they rethink the design of their supply chains to protect themselves from shifting trade policies. There’s also a trend of localization, with businesses unbundling their global supply chains and moving production closer to the consumer in key markets to meet the changing requirements of certain customer segments.
Whichever course of action businesses follow, the reconfiguration of the supply chain is no easy task. And with geopolitical tensions seemingly here to stay for the foreseeable future, treasurers must be ready to support the business through this challenging environment. It’s therefore crucial that treasury teams align themselves with their core business. Doing so will enable the department to manage risk proactively and facilitate the smooth reconfiguration of the supply chain.
Treasurers should also look towards technology. Digitizing the supply chain will drive greater visibility and flexibility into processes. It will also help break down silos that may exist between treasury, AP and procurement, ensuring that these departments work towards a single goal.
4. The inevitability of blockchain
Talk of blockchain and distributed ledger technology (DLT) has been rife at treasury conferences for some time now. Precisely because these sessions still draw in a crowd; there’s a certain allure about the technology and its transformational potential.
What’s encouraging is the hype is subsiding and being replaced by action. Punctuating the conference were examples of how banks and corporations are putting the technology into action. A lot of this activity is happening in the trade and supply chain space. Numerous spokespeople cited this space as one that will be transformed as the technology matures in the coming years.
The overriding message from the conference: this technology is coming. Treasurers need to be ready for when it does.
5. Future proof yourself
It’s not just the future of the treasury department that treasurers must think about. Treasurers must also think about their own future.
There’s lots of talk about technology impacting the world of work, Including the usual scare stories about how machines are making humans redundant. While these stories are overblown, technology is forcing many roles to evolve.
For corporate treasury specifically, technology is being used to automate the transactional elements of the role so treasury can work on more strategic matters. This isn’t a revolution; the role has been evolving in this way for some time now. But new technology will accelerate the process.
So treasurers need to think about what their role will look like in the future and lay the necessary groundwork to thrive going forward. Most crucially, treasurers should hone their digital skills to harness technological innovation and use it to their advantage.
Don’t stand still
Corporate treasury is a profession on the move and the future is coming faster than you think. Standing still is the fastest way to move backwards. So get out there, be curious and become future-ready.